by SupremeLending | Aug 9, 2024
Celebrate new beginnings with these quick and easy back-to-school homeownership tips.
As summer winds down and it’s back to school season, it’s not just the kids who need to get ready for the new academic year. Homeowners can also take this time to reassess, reorganize, and revitalize their living spaces and check in on their mortgage. At Supreme Lending, we understand that your home is more than just a place to live—it’s a learning environment, a cornerstone of your family’s life, and one of the most important investments. Here are seven practical back-to-school homeownership tips to ensure you’re at the top of the class this school year.
1. Declutter and Donate
When it comes to back-to-school homeownership tips, decluttering is a valuable first step to creating an organized home. Research has found that physical clutter can compete for your attention, resulting in decreased performance and increased stress. Back to school is the perfect time to take on the challenge. Go through closets, pantries, utility drawers, and other areas to remove items no longer needed. You can also give back to your local community by donating any gently used clothing and items to local charities. A clutter-free home supports a clear mind for both studying and relaxing.
2. Organize Study Spaces and Refresh Your Office
With the return to school, having a quiet and organized space for homework, study, and work is crucial. Carve out a dedicated area in your home free of distractions. Ensure that it’s well-lit, stocked with necessary supplies, and comfortable enough to keep concentration levels high. If you work from home, this could be a great opportunity to refresh and beautify your working space by adding house plants, hanging wall art, or painting an attractive accent wall.
3. Deep Clean
Give high-traffic areas like the entryway, living room, and bathrooms a deep clean. These areas tend to accumulate dirt and clutter quicker. Scrub down all showers, bathtubs, and bathroom tiles with proper cleaner. Don’t forget the baseboards, windowsills, and surfaces that can build up dust. A clean environment not only creates an inviting space but can also reduce stress and promote a healthy, positive atmosphere.
4. Implement Energy-Saving Practices and Smart Home Technology
Other back-to-school homeownership tips include enhancing your home technology. Take advantage of energy-saving practices such as programmable thermostats, LED lighting, and smart power strips. Adding innovative smart technology can also enhance things like electricity, lighting, appliances, and entertainment for easier convenience.
5. Evaluate Home Safety and Procedures
It’s important to regularly review your home safety checklist. Double check your smoke detectors, carbon monoxide detectors, and fire extinguishers. Update your first aid kit and ensure everyone knows where it is. Remove any tripping hazards and secure heavy furniture or things mounted on the wall. If you have younger family members, practice emergency plans so they know what to do in case of an unexpected event.
6. Schedule Regular Maintenance
Stay ahead of the game by scheduling regular home maintenance checks around the house. This may include servicing major appliances, trimming the trees, cleaning the gutters, or treating the yard for pests and insects. Preventative maintenance can help save you from potentially costly repairs down the road. With these back-to-school homeownership tips, you can maintain a happy, healthy, and efficient home environment that supports your family and lifestyle.
7. Check In on Your Mortgage
Amidst life’s hustle and bustle, don’t forget to check in on your home loan. Make sure you are still making the most of your mortgage. Do you plan on moving and buying a new property any time soon? Maybe you finally want to make those dream home renovations? Or are you considering a refinance* to access your home equity or lower your current mortgage payments? Using a refinance calculator can help give you a rough estimate of costs to see if you may benefit from refinancing.
Whatever your home financing goals may be, our experienced team at Supreme Lending is here to help you review your mortgage and guide you through the loan process. Find a loan officer near you and get started today!
*By refinancing an existing loan, total finance charges may be higher over the life of the loan.
by SupremeLending | Aug 6, 2024
Refinancing* your mortgage may be a strategic financial move that may unlock potential savings, but a common question for homeowners is, how soon can you refinance? Timing is everything. Whether you’re looking to lower your monthly mortgage payments, pay off your home loan quicker, or tap into your home equity for extra cash, knowing when to refinance is important. Let’s dive into the basics of refinancing, how soon you can refinance depending on the loan type, and how to determine the ideal time to consider the option.
Understanding the Basics of Refinancing
Refinancing involves taking out a new mortgage with different terms and using it to pay off your existing loan. The process may result in various benefits:
- Lower Interest Rates. If market conditions cause rates to drop since you purchased your original home loan, refinancing at a lower rate may lead to significant savings over the life of the loan.
- Reduce Monthly Payments. Securing a lower interest rate or a longer loan term may also decrease your monthly mortgage payments.
- Shorter Loan Term. If you can pay off your mortgage much sooner due to an increase in income, for example, it may make sense to refinance into a shorter term.
- Switch Loan Type. If you initially choose an Adjustable-Rate Mortgage, also known as an ARM loan, you may be able to refinance into a fixed-rate loan before the ARM rate adjusts. This may save you interest costs in the long run.
- Cash Out on Your Equity. When refinancing, you might opt for a cash-out refi loan. This allows you to tap into your equity, which is the portion of your home’s value that is yours.
- Payoff Higher-Interest Debts. You can use the cash from your equity to pay other debts such as high-interest credit cards, car loans, or student loans.
- Eliminate Private Mortgage Insurance. In some cases, you may have to pay a monthly fee for mortgage insurance. Once you reach a certain equity threshold, some lenders allow you to remove the private mortgage insurance by refinancing.
Timing Guidelines Based on Loan Type
The timing for when you can refinance your home depends on the lender and type of loan. It’s common for mortgage refinances to require a waiting period, or a seasoning period. Here are some general guidelines on how soon you can refinance a mortgage:
Conventional Loans
For conventional loans, most lenders require at least six months from your original closing date before you can refinance. This waiting period allows lenders to assess your payment history and ensure that you’re not a high-risk borrower. If you use another lender to refinance, you may be able to do a rate-and-term refinance without a seasoning period.
FHA Loans
For FHA loans, which are insured by the U.S. government’s Federal Housing Administration (FHA), you may be able to get an FHA Streamline Refinance. This simplifies the process and requires less documentation. However, you can’t get a streamline refinance until after 210 days from the closing date. You must also have made at least six months of on-time payments.
VA Loans
Similar to FHA, VA loans also offer a streamlined refinancing option known as an Interest Rate Reduction Refinance Loan (IRRRL). You’ll have to wait 210 days from the closing date of your existing VA loan and make six consecutive on-time payments to be eligible.
USDA Loans
These types of loans for rural areas are similar to those of FHA and VA loans. You’ll typically need to wait for 180 days or 12 months (depending on the type of refinancing) and establish a history of making on-time payments for the past six months to one year depending on the program.
Cash-Out Refi Loans
Additionally, how soon can you refinance with a cash-out refi? For this option, you typically need to have occupied the home as a primary residence for at least 12 months.
Why Timing Matters
Prepayment Penalties and Other Fees
A mortgage prepayment penalty is a fee charged by lenders if you pay off your mortgage early. Essentially, this helps compensate lenders for the interest income they lose when the loan is paid off early. When refinancing, it’s important to know if your current mortgage has a penalty or other fees associated to paying off the loan early. The cost of the fee may outweigh the benefits of refinancing.
Down Payment Assistance
Additionally, if you used down payment assistance for your current mortgage, check the terms of that aid. For some programs, refinancing too soon might require you to repay the assistance amount. Other programs may even require repayment of the down payment assistance amount when you refinance regardless of how long you’ve had the loan. This could impact any potential savings from refinancing.
Best Practices and Considerations
When deciding whether it’s a good time to refinance, here are a few things to keep in mind:
- Interest Rates. Monitor the rate and market trends if your primary goal is to refinance with a lower interest rate. You can always reach out to your local loan officer at Supreme Lending to help determine what your potential refinance rate may be.
- Closing Costs. Just like a traditional mortgage, refinancing includes closing costs that can range from 2% to 6% of the loan amount. Be prepared so you’re not surprised at the closing table.
- Break-even Point. Calculate the break-even point by determining when the costs of refinancing will be outweighed by the potential savings. Basically, it’s when your investment in refinancing will start to pay off.
- Loan Term. Consider whether you want to shorten your loan term to save on interest over the life of the loan or extend it for potentially lower monthly payments.
- Credit Score. A stronger credit score may qualify you for more favorable rates, so it’s worth monitoring your credit and making regular, on-time payments.
- Financial Goals. One of the most important aspects of refinancing is to make sure that a refinance aligns with your short- and long-term financial goals. Are you looking to minimize other debts, invest in renovations, or change your loan type?
Is Now the Right Time to Refi?
So how soon can you refinance your mortgage? Ultimately, it comes down to the loan-specific guidelines and your personal financial goals. It’s essential that you are well-informed, understand the refinancing process, and know all the factors that will go into your new refinanced loan. At Supreme Lending, we’re committed to helping you navigate your refinancing journey with ease and confidence.
Ready to explore your refinancing options? Contact us today to get started.
*By refinancing an existing loan, total finance charges may be higher over the life of the loan.
by SupremeLending | Aug 1, 2024
When someone asks if it’s possible to add renovation costs to mortgage, the simple answer is yes! When buying a home, people dream of finding the perfect property that checks off all their boxes. However, sometimes the ideal property may need a little work to become that dream home. This is where renovation loans come in. By adding renovation costs to your mortgage, you can finance both the purchase of your home and the necessary improvements into a single loan. Read on to learn more about renovation loan options, benefits, and frequently asked questions.
Types of Renovation Loans
There are several loan programs to consider that can add renovation costs to your mortgage:
- FHA 203(k). This renovation program is an FHA loan, insured by the Federal Housing Administration. There are two options depending on the extent of the home remodel or repairs. The Limited 203(k) is for more minor updates that ensure the home is safe and functional and can include basic cosmetic improvements. The Standard 203(k) option offers more flexibility and larger scale renovations, such as structural foundation or adding square footage. Only primary residences are eligible. Click here to read more about the FHA 203(k) Renovation Loan.
- Fannie Mae HomeStyle®. This is a Conventional loan option to add renovation costs to mortgage. It includes home improvements that are permanently affixed to the property and add value, including luxury items such as high-end flooring, decks, fencing, a pool, etc. Unlike the FHA 203(k), this program can also be used toward qualified second homes and investment properties.
- VA Renovation. This renovation loan is for eligible military Veterans, active duty personnel, and some surviving spouses. It offers the same benefits as VA loans, such as no down payment requirements and lower closing costs, plus the ability to include certain home repairs into a single, affordable mortgage.
- Supreme Dream 203(k). Another exciting renovation loan program that Supreme Lending offers is the FHA 203(k) loan, as noted above, combined with the Supreme Dream down payment assistance resulting in less upfront costs.
How Renovation Loans Work
- Determine Your Renovation Needs. Assess the scope of your renovation project and obtain estimates from contractors to understand the anticipated costs.
- Loan Application. Apply for a renovation loan with a lender. You will need to provide detailed renovation plans. At Supreme Lending, we have a dedicated construction lending team to support all renovation loans for a smooth process.
- Loan Approval. Once approved, the loan amount is based on the projected value of your home after the renovations are completed.
- Renovation Process. Funds are typically disbursed in stages as the renovation progresses ensuring that contractors are paid, and the work is successfully completed.
- Final Inspection. After the renovations are finalized, a final inspection is typically required to verify that the work meets the loan requirements, and any remaining funds are released.
Frequently Asked Questions
Can I add renovation costs to any type of mortgage?
Not all mortgage types allow for renovation costs to be added. Specific loans, such as the programs listed above, are specifically designed to fund renovations and have additional steps and guidelines to follow.
How are renovation costs disbursed with a renovation loan?
With a renovation loan, funds for the purchase of the property are typically disbursed at closing. The renovation funds are placed in an escrow account to be paid out as repairs are completed.
How are renovation loans approved?
Your lender’s underwriting department will help approve the loan application and make sure all guidelines and requirements are met. This includes reviewing the home’s value after the renovations are made. The renovation schedule and documentation are also evaluated to ensure a seamless process.
Are there limits on the amount someone can borrow for renovations?
Yes. Each loan type has specific limits depending on the program. For example, an FHA 203(k) Limited loan currently has a maximum of $35,000* repair escrow amount to use toward the contractor’s costs and renovation fees. In turn, an FHA 203(k) Standard depends on the property’s FHA county loan limit. For Conventional renovation loans, the maximum renovation cost is typically up to 75% of the after-improved home value.
*Note: The FHA 203(k) Limited options will be increasing its maximum limit for renovation costs to $75,000 on or after November 4, 2024.
Click here for a complete guide to home renovation loans that includes a detailed comparison of FHA 203(k) and Conventional HomeStyle® loans.
Want to learn more about how to add renovation costs to your mortgage? Get started in creating your dream home with the help of Supreme Lending. We’re here to help every step of the way.
by SupremeLending | Jul 29, 2024
If you’re thinking of buying a home, you may want to consider the possibility of seller concessions to help reduce upfront loan expenses. Imagine having a portion of your mortgage closing costs covered or even getting some essential home repairs taken care of without having to dig into your savings. That’s where seller concessions come in, also known as seller assistance. It can be a significant benefit for both buyers and sellers. In this guide, we’ll explore what seller concessions are, seller assist limits, and frequently asked questions.
What Are Seller Concessions?
Seller concessions are contributions paid by the seller that go toward the homebuyer’s closing costs. These can include closing fees, prepaid expenses, or even home repairs or improvements. These concessions can help lower the amount of money a buyer needs to bring to the closing table, making the home purchase more affordable.
The concession amount can be expressed as a percentage of the home’s purchase price or fixed dollar amount.
Examples of What Seller Concessions Can Cover
Seller concessions can be used for a variety of mortgage and homebuying costs including:
- Loan Origination Fees. Fees charged by the lender for processing the loan application.
- Appraisal Fees. This is the cost of having a home appraised.
- Home Inspection Fees. This is the cost of having a home inspected before closing.
- Property Taxes. Prepaid property taxes may be included in closing.
- Title Insurance. This insurance protects the buyer and lender from potential disputes over ownership.
- Discount Points. Also known as mortgage points, these help pay down the interest rate using upfront costs.
- Home Repairs or Improvements. Costs for necessary repairs identified during the home inspection or agreed-upon improvements before the sale.
How Do They Work?
- Negotiation. Seller concessions are typically negotiated as part of the buyer’s and seller’s purchase agreement. This request can be made with help from a real estate agent.
- Agreement. If the seller agrees to concessions, the specific details are outlined in the contract and must not exceed a specified limit depending on the loan type.
- Appraisal. The agreed-upon concessions cannot inflate the property’s value. Lenders require an appraisal to ensure the property’s market value supports the loan amount, including the concessions.
- Loan Approval. The lender will review the agreement and appraisal. This will ensure that the concessions align with the mortgage program’s guidelines.
- Closing. When the loan is ready to close, the costs are applied to the buyer’s closing costs or other agreed-upon expenses.
Who Benefits from Seller Concessions?
Both the buyers and sellers can benefit!
- Buyers. Concessions can lower the upfront costs needed to buy the home, making it easier to afford the property.
- Sellers. Offering concessions can also make the home more attractive for potential buyers, helping sell the home quicker.
Seller Assistance Limits
Limits on how much a seller can contribute vary depending on the loan type and down payment:
Conventional Loans
- Primary residence and second homes:
- 3% maximum with less than 10% down
- 6% maximum with 10-25% down
- 9% maximum with more than 25% down
- Investment properties:
- 2% maximum regardless of down payment
FHA/USDA Loans
- 6% maximum toward closing costs and prepaid items
VA Loans
- 4% maximum toward prepaid items
- No limit for closing costs or reasonable discount points
Frequently Asked Questions
Can the seller cover the entire down payment?
No. Seller concessions cannot be used for the full down payment. They are typically used for closing costs, prepaid expenses, and other associated fees, while meeting the loan guideline limits.
Does seller assistance affect the loan approval process?
Seller concessions themselves do not affect loan approval, but lenders can consider the impact on the Loan-to-Value (LTV) ratio and may require specific guidelines.
How does it impact the home appraisal?
The home’s appraisal must support the purchase price, including any seller contributions. If the appraised value is lower than the agreed-upon price, the lender may require adjustments.
Can a buyer negotiate for concessions?
Yes! Homebuyers can request this during negotiations. It’s essential to work with a knowledgeable real estate agent to help navigate the process.
How do seller concessions benefit first-time homebuyers?
First-time buyers often benefit from this as they may have limited funds for closing costs and other expenses. Seller assistance is another great way for more people to unlock the door to homeownership!
If you’re ready to start your homebuying journey, your local Supreme Lending team is ready to help! Contact us to learn about your mortgage options and get pre-qualified today.
by SupremeLending | Jul 26, 2024
Don’t let mortgage myths get in the way of your dreams of homeownership. Unfortunately, there are several misconceptions about home financing that can make getting approved for a loan seem more difficult than it could be. Supreme Lending is here to set the record straight and help you navigate the steps of the mortgage process with the knowledge you need. Let’s debunk these six common mortgage myths and uncover your homebuying possibilities.
#1 Myth: You Need a 20% Down Payment.
Believing that you must have at least a 20% down payment saved up for a home may be one of the most common mortgage myths of all. When in fact, there are several loan options with lower down payment requirements.
For example, Conventional loans can require as low as 3% down for first-time homebuyers and 5% for repeat buyers. FHA loans require 3.5% down, serving as another affordable option. VA* and USDA** loans are unique in that they require zero down payment. There are also several down payment assistance programs for eligible homebuyers depending on various factors such as income or geographic location.
Why 20% Down?
The 20% myth may be misunderstood because of private mortgage insurance (PMI). If you don’t put down 20% for a Conventional loan, lenders will typically require you to have PMI, which is an added cost to your monthly mortgage payment. It’s important to note that if a borrower reaches a specified equity threshold in their home, mortgage insurance may be removed.
#2 Myth: Pre-Qualification Is the Same as Pre-Approval.
Nope. These terms are often used interchangeably but they are not the same when it comes to where you are in the loan process. Both provide an estimate of how much you may be able to afford for your monthly mortgage payments. However, the key difference between a mortgage pre-qualification and pre-approval is how lenders verify your information.
Pre-qualification is a high-level mortgage estimate based on self-reported information, such as income, debts, and assets. Plus, it’s oftentimes quicker to obtain.
On the other hand, a pre-approval takes a more detailed approach. This involves a completed loan application. Homebuyers must provide thorough documentation of financial history such as pay stubs, W-2s, and bank statements for verification. To get pre-approved, lenders will also verify your credit and employment.
#3 Myth: You Need a Perfect Credit Score.
A recent study found that people either don’t know or significantly overestimate the minimum credit score required for a typical mortgage, reported by Mortgage Professional America. While a higher credit score may help you secure more favorable mortgage rates or qualify for a higher loan amount, you don’t need to have flawless credit.
Different loan programs can accommodate various credit score ranges. For example, FHA loans are designed to make homeownership more accessible by accepting lower credit scores, a minimum requirement of 580.
#4 Myth: You Should Always Choose a 30-Year Mortgage Term.
A 30-year fixed-rate may be one of the most popular mortgages, but it’s not the only one to choose from. Depending on your situation or long-term goals, other mortgage terms may be a better fit. Whether it’s a 15-year term to pay the loan off quicker, or a 20-year term, Supreme Lending offers a wide range of options that can be tailored to match your needs.
#5 Myth: Applying for a Mortgage Will Hurt Your Credit.
While applying for a loan can have a temporary impact on your credit score, it’s not as damaging as some might think. When you apply for a new loan, lenders will pull your credit. This is also known has a hard inquiry for your credit report. According to Experian, credit scoring systems typically respond to hard credit inquiries with a slight, temporary dip in your credit score by a few points. However, the impact is small and can resolve in time.
Additionally, once approved for a mortgage, making on-time monthly payments may strengthen your credit in the long run.
#6 Myth: Down Payment Is the Only Closing Cost.
The down payment is a key part of closing a loan but isn’t the only cash you need to finalize your mortgage. Closing costs are other expenses beyond the down payment such as origination fees, appraisal fees, escrow funds, and title insurance. These costs will be outlined in the closing disclosure.
In addition, some lender programs allow borrowers to buy discount points to reduce their interest rate. This is essentially buying down the rate to save in interest over time. One discount point would equal 1% of the loan amount and would be included as a closing cost.
Understanding the Mortgage Process
Buying a home is one of the most significant purchases you can make. It’s crucial you’re properly informed about the loan process. By debunking these common mortgage myths, we hope to empower you with the knowledge needed to make informed decisions.
At Supreme Lending, we’re dedicated to providing personalized service and expert guidance throughout your homebuying journey. If you have any questions or want to explore your mortgage options, contact us today!
*Must be eligible Veterans, Active Duty Personnel, Reservist, National Guard, or qualifying surviving spouses. VA funding fee will apply. VA funding fee can vary based on usage.
**Property must qualify for USDA program.
